NTT DATA Publishes InsurTech Outlook 2020

6% of Insurtech companies represent 67% of all cumulative investment since 2010.

April 27, 2020
NTT DATA Corporation

Tokyo, 27 April. 2020NTT DATA, a leading IT services provider, and the multinational business consultancy everis, an NTT DATA company, have launched Insurtech Global Outlook 2020 - an analysis of the leading trends in Insurtech and the impact of advanced technologies and new business models throughout 2019.

The fourth issue of this report introduces a new predictive model aimed at identifying, observing and assessing the variables that have been key to other successful startups - those that got an exit-, and to the discovery of their common features. This milestone has been achieved thanks to the development of a proprietary algorithm (robo-advisor) and the data analysis solution, which have helped to assess over 53,000 startups and to identify the key characteristics of 5,000 start-ups that have achieved an exit.

Simultaneously, and with the goal of expanding the scope of this new report, 44 managers across insurance companies in over 12 countries have been interviewed. These interviews provide information on both global and local leaders in all insurance sectors, and help compare market trends and investment analyses. They also provide insight into the views and change programmes implemented by insurance companies to address the challenges faced by the Insurtech environment today.

The analysis of all these elements provides a realistic picture of the sector, of investor preferences, and the trend-setting technology re-designing the insurance industry in this new digital area. The automated information processing capacity of our data analysis solution incorporates a repository of detailed information on startup activity related to the insuring sector worldwide, helps to constantly update and assess key information, and obtain a more accurate picture.

According to Carlos Ordóñez, the Global Head of Digital Insurance at everis, "larger insurance companies no longer see Insurtech as a threat, but as a complement that will help them to seize new opportunities and to face their challenges with better chances of success". He also concludes that "a correct understanding of the new ecosystems is a key factor".

Investments are concentrated in 6% of Insurtech companies

Since 2010, investment in Insurtech has been growing exponentially in all markets, especially in those that have shown a sustained growth capacity over the decade. This analysis concludes that Insurtech investment is concentrated in 6% of companies that have robust models; they have attracted 67% of the total cumulative investments, mainly through later-stage investment rounds. This makes it even more important to recognize potentially successful sector startups, as it allows investors to enter in more affordable early-stage rounds, thus promoting sector growth.

The report states that, in 2019, investors committed 6,300 million dollars to acquiring Insurtech, which represented a 58% increase over the amount invested within the 2017-2019 period. This amount was however, distributed among only 25 companies (of a total of 238), which received 72% of available financing.

Therefore, this trend shows that an increasing number of investors are interested in participating in the ecosystem of insurance startups with more mature and consolidated business models. This is because their technological solutions provide them with new sources of income sources, boost their operational performance and improve client knowledge and retention. Insurers also display the same trend, investing more intensively in 2019 in industry startups with more consolidated models.

In 2019, the financing of European and Asian Insurtech companies took an important leap forward, from which it may be deduced that the Insurtech ecosystem is maturing in regions such as Europe or Asia. However, the lion's share of investments is still concentrated in the United States, where most winning players are based. This is confirmed by the fact that over the last year, funds concentrated their investments on a single company per business line.

The most demanded technologies: Cloud, Mobile & Applications, AI, and IoT
With regard to technologies, most investments were concentrated in startups that develop Cloud, Mobile & Applications, AI and IoT, since investors deem those to be the technologies with the most value generation potential.

Insurance companies are doubling their investment in Insurtech startups and related sectors. Regarding technologies, 74% of the total amount available has been allocated to Cloud, Mobiles & Applications companies; 16% to AI startups and 6% to IoT players respectively.

Simultaneously, Insurtech has also re-defined the intelligent mobility ecosystem, where large telecommunications carriers are playing a key role by investing large sums in telematic development. Over the last two years, 78% of investment in startups within this sector were concentrated on four companies of a total of 153. In 2019, one of them, Friday, received funding of 127 million dollars.

Promising emerging markets
The report hints that emerging markets are leading the disruption within the insurance sector. For example, in Asia, Insurtech investment has grown significantly over the last few years, and Asian technology giants have played an important role by investing heavily in new business models within healthcare or mobility sectors. According to this report, 60% of funds invested in the 2010-2019 period were allocated to 32 startups. Another noteworthy aspect is the inclusion of Africa in the playing field, especially in the form of new business models such as micro-insurance and on-demand insurance, where main insurers are already carving out their positions.

Market development in these countries and the speed at which they implement new technologies have become the perfect storm for attracting new business models and investment from tech giants, creating a perfect scenario to lead this ecosystem.

Download the full report here.
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About everis

everis is a consulting and outsourcing company that addresses all aspects of the financial sector. Its turnover for the last financial year amounted to 1,437 million euros. The everis team consists of over 27,000 professionals in Europe, United States and Latin America.

everis is firmly committed to talent and innovation and its main goal is to attract the best professionals and help them develop their careers within the company https://www.everis.com/

About NTT DATA

NTT DATA is a leading provider of information technology services and a fundamental part of global innovation. Based in Tokyo, it develops business operations in over 50 countries, and emphasizes a long-term commitment that combines global reach with local proximity in order to offer first-level professional consulting services ranging from system development to integral outsourcing services.
For more information, please visit www.nttdata.com.

Press contact:

everis - Cristina Cabeza
cristina.cabeza.llata@everis.com
T. 917 49 00 00 / +34 628 917 869

Ezequiel González
ezequiel.gonzalez.campodonico@everis.com
T. 917 49 00 00 / +34 648 06 63 30

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